When it comes to publicly traded engineering and construction companies, Fluor
Once again, current results were encouraging. Revenue was up 18% from last year, and operating results improved significantly, even when you add back a sizable charge in the year-ago period. Perhaps even more important to current investors, new awards increased 78% in the quarter, and the backlog rose a little more than 15%.
Over the next three or four years, I would expect to see a change in Fluor's business. The company is presently doing quite well for itself with oil/gas/chemical projects, but eventually that spending boom will end, as the ExxonMobils
But as oil/gas may slow, I'd expect power to begin taking off. I've already talked at length about the newly announced projects from TXU
Following the build-out of the power sector should be interesting. Utility customers (that's you and me, as well as businesses) won't like the higher rates that utilities will try to pass through to pay for the construction, but people won't be any happier with blackouts, either. Even though economic activity will almost certainly slow at some point, it's unlikely that it would seriously derail capacity expansion plans.
Figuring out fair valuations today strikes me as guesswork and voodoo masquerading as mathematics, particularly with so many projects anticipated but yet to be announced. And while I like Fluor just fine as a company, perhaps Shaw and Washington might be slightly better values at present.
For more constructive Foolishness:
- McDermott: A Construction Twofer
- Fluor Hopes to Floor It
- Shaw Gets Stiffed
- Fostering a Better Future
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).